These are the reasons why an investment in real estate is the best investment strategy for most people in Canada:
1) No Tax on Principal Residence: There is no capital gain tax on your principal residence. Considering lot of us are heavily taxed on most of investments, this is a huge benefit as every penny of gain goes in your pocket.
2) Forced Saving: If you have access to your funds, it is more than likely that you will end up spending it. The beauty of real estate is that it is not as accessible as other types of investment, therefore one is very likely to sit on it for a number of years and guess what? Most of the time, you end up accumulating considerable equity.
3) Pride of Ownership: Most homeowners take a lot of pride in owning their home and our life is centered around making the place we live more friendlier, beautiful and serene. If you own your house, you tend to customize it to fulfill your living requirements.
4) Relative Immunity to Market Ups and Downs: I hear a lot about economic turmoil and a catastrophic decrease in real estate prices. There is no doubt that a lot of it is true and there has been a drastic dip in real estate prices south of border. However, Canada is quite unique in this regard; there are a number of positive factors that are likely to protect us from such negative market change, such as:
- There is a continuous inflow of immigrants in Canada and most immigrants love to own their home
- Our banking system has been an example for the whole world, as it is built on solid foundation and reckless lending have been avoided
- The Canadian economy is showing signs of improvement, with a tremendous track record in real estate for the past decade
- It is a cyclical industry and for those of us who are looking for principal residence, most of the time we can afford to wait until market picks up
5) Opportunity of Rental Income: There is always the possibility of generating rental income and this could mean a substantial contribution towards your mortgage payment or, in a number of cases, one can generate positive cash flow by renting the entire property and build not just equity but a bit of positive cash flow.
Ali Hassan is a sales representative at Century 21 Harvest Realty Ltd. in Toronto, Ontario.